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Newcastle's Wonga Deal Comes In For Widespread Criticism

Written by: Keith Tully

Reviewed: Monday 8th October, 2012

wonga

Newcastle United has caused a stir by striking a sponsorship deal with payday loans company Wonga.

The Premier League side is set to gain around £8m per year from the deal but have come in for widespread criticism for ‘getting into bed’ with what many deem to be legalised loan sharks in an part of the UK which is suffering with financial difficulties more than most.

There are those who feel Wonga are merely hunting for prey by exploiting the hardcore relationship between Newcastle fans and their club.

R3, the Association of Business Recovery Professionals, were quick to state their discomfort with the deal considering 35.2 adults per 10,000 are rendered insolvent in the North East – home to Newcastle United – compared to just 17.5 in London and 29.6 in the neighbouring North West.

R3 President Lee Manning said: “Wonga has chosen to target a region that has comparatively high numbers of people experiencing financial difficulty. Our experience tells us that many of those seeking high cost credit need professional advice for their financial problems, rather than accruing further debt.”

Wonga’s founder Errol Damelin has rebuffed those claims, saying his firm are football fans and as such, understands the club and its fans.

“Football in the UK is such a strong platform to have a social conversation with people,” the 43-year-old said. “It’s not just about making money and giving out loans.”

Damelin was quick to allay any fears that Wonga would look to secure naming rights for the stadium which has always affectionately been known by fans as St. James’ Park, even though owner Mike Ashley officially renamed the ground the Sports:Direct Arena just two years ago.

“We were never interested in the naming rights for ourselves. It’s not what the fans wanted and ultimately football is about them. This deal is the only way fans would have gotten the name back and I’m proud to have been able to do it.”

This isn’t Wonga’s first foray into the football club sector; the company, who has been criticised for the interest rates it charges to consumers for loans to tide them over until payday, already sponsors Scottish Premier League club Hearts and Championship side Blackpool.

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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